Becoming Debt-Free in Today's Economy

Today, when most people think of America's debt problem, they think of it on a national level and think about the federal and state governments. Sure the government has some severe spending issues and needs to get itself out of debt, but that is only part of the story. Over the last 10 years, Americans have become enslaved to creditors to the point of no return. When you rob Peter to pay Paul every month, it's pretty hard to ever consider becoming debt-free. Currently, in America the median household income is continuing to decline every year while people's debt continues to rise. In fact, consumer debt in the US since 1971 has increased by 1700%. I don't know about you, but this is craziness. The overall credit card debt of the entire US is $798 billion as of 2011. I think it's time that people should start considering filing bankruptcy. This amount of debt is unfathomable and never will be able to be paid off.

Americans need to get back to their roots and start paying cash for things. One way to do this is to file for bankruptcy and the individual will basically have no choice at least for a year or so. They will remember what they were told by their parents and grandparents of not spending what you don't have. With this kind of debt the idea of being debt-free is impossible. One of the side benefits of filing Chapter 7 bankruptcy for the individual that has a large amount of credit card debt is becoming debt-free or close to it. If a person doesn't have a car payment and all they have his medical bills and credit card debt, filing Chapter 7 bankruptcy will virtually eliminate all their debt with the outcome of being debt-free. This is probably the quickest and easiest way out of debt. If someone has $30,000 in credit card debt, outside of winning the lottery, the debt will probably never be paid off. Credit cards are making Americans slaves to the credit card companies that continue to accept only minimum payments while making huge profits on interest only.

Don't Wait Until It's Too Late For Bankruptcy Filing

While no one really wants to file for bankruptcy, sometimes there is no other feasible way out. Sure there is debt settlement and trying to continue kicking the can down the road, but at some point in time, filing bankruptcy might be necessary. It was reported in 2011 that the average American has over $16,000 in credit card debt. Although this number doesn't seem that bad, when including the average income of Americans to be around $35,000 a year, all of a sudden this number gets very large. The interest alone will keep this average person in bondage to the creditors for the rest of their life unless they do something drastic. Filing Chapter 7 bankruptcy by most is considered taking drastic actions. But when considering what it will do for these individuals it can truly be a blessing to get these ailing Americans out of debt quickly.

The first step to see if a bankruptcy filing is in your future is to add up all of your credit card debt and then budget the amount of money you can set aside to pay the bill down monthly without charging any more. If you can pay the credit cards off in 4 to 5 years, then technically you have a feasible solution to eliminate debt. It might be painful for this time, but it is doable. If there is no way you can pay these credit card bills off, then the only real solution is filing Chapter 7 bankruptcy. The only other option would be using debt settlement. Typically, debt settlement only works on balances lower than $10,000. The debtor has to come up with a lump sum for the creditor to negotiate their balance down. This is why it's a much better idea to spend your money hiring a bankruptcy attorney to file for bankruptcy. Filing Chapter 7 bankruptcy only takes about 4 to 6 months from start to finish and in the end many debtors exit being virtually debt-free.

What Happens To A Co-signer When You File Chapter 7 Bankruptcy?

Many people that are in financial trouble are very stressed emotionally. Making the decision to file Chapter 7 bankruptcy can still be difficult for the overwhelmed debtor. Getting advice from an experienced financial professional or a bankruptcy attorney can be critical to determine the best course of action. Once the decision has been made to proceed with filing Chapter 7 bankruptcy the individual usually experiences a huge sense of relief knowing that here is hope for a second chance for a stable financial future. However, what happens if the debtor has debts that are guaranteed by a co-signer?

Many lenders, whether car finance companies, mortgage lenders, credit card lenders, or any other kind of credit grantor, are in the business of calculating and managing risk. If an individual’s credit history has been poor for some time, the individual may be asked by the credit grantor to find a co-signer or guarantor.

A co-signer refers to another individual who is equally responsible financially with the other person for their debt. The co-signer has signed an agreement on the account or loan, which is referred to a “joint account”, and is therefore just as responsible for the debt. A guarantor refers to an individual who has agreed to take responsibility for payment on a debt in the event that the original debtor defaults on their financial obligation. A guarantor’s liability is considered a contingent liability meaning that the guarantor is only obligated to pay on the debt if the person has defaulted on their payments. The bottom line is, if the individual’s debts have been co-signed or guaranteed by another person, such as a friend or relative, then filing Chapter 7 bankruptcy could damage the friend or relatives credit. This is why it is imperative that the debtor seek financial advice from a bankruptcy attorney to discuss their circumstances and see what options are available. Many times the bankruptcy attorney can help the individual and their families avoid serious repercussions and/or minimize the financial consequences to all parties involved. In a nutshell, filing Chapter 7 bankruptcy can have many advantages for a financially overwhelmed individual, but they must weigh out all of their options carefully with the help of a professional.